|
Special Reports
Mortgage Fraud: Protecting
The Investment
'Predatory Lending Prevention Helpful in Stopping Fraud'
By Amilda Dymi
IRVINE, CA -- At least one provider of technology designed to help lenders comply
with different types of regulations, Mavent Inc., Irvine Calif., sees a growing demand for products that help prevent
high-cost predatory lending that consequently serve as fraud-prevention tools.
The Mavent Expert System provides a full menu of automated compliance solutions
that protect all business types from federal, state and local regulatory risks through customizable options. It
features "2comply" for originators, the Inspect tool for loan purchasers, and Intercept, which is specifically
designed for users who require protection from making or purchasing high-cost loans.
"One of the most difficult challenges to overcome when providing compliance
products is having an in-depth understanding of the mortgage industry and the data that are captured in the loan
origination system," said Al Ogrodski, Mavent's first vice president of information technology. "And
making that work through some sort of engine is the trick, because every lender seems to store data in a slightly
different way, or they have their own way of doing things."
One lender might have an appraisal review fee to mean one thing and another lender
considers it to mean another, he said, making it more difficult for compliance product providers to come up with
universal solutions. He explained that it is not just different lenders operating their data in different ways
in their systems. "There also are the so-called different theories of lending." Mr. Ogrodski believes
that state-licensed lenders probably are the easiest types of lenders to follow up.
"The most complicated ones are federally chartered institutions, such as
national banks that need to consider pre-empt high-cost lending rules or the so-called exportation, meaning a national
lender can choose to export their home state's interest rules in the other states that they do business in,"
he said. "So, determining what compliance rules are applicable for the company and for the specific loan becomes
complex."
Mavent said it provides a specific compliance system for all types of lenders,
yet about 95% of lenders operate as state-licensed lenders, with the large nationally chartered lenders owning
a higher percentage of the market share.
The demand for specific solutions, however, is the same.
"What is getting publicity in today's marketplace is high-cost lending and
predatory lending, although most lenders do not do predatory lending," Mr. Ogrodski noted.
Mavent solutions, he said, offer a couple of delivery mechanisms that compliment
the aforementioned Intercept product, which helps lenders avoid purchasing high-cost loans through a fully integrated
approach, securing real-time access to loan information and allowing users to take corrective action and resubmit
the loan.
"Our target market is the originator, as there has been a lot of movement
in the secondary market right now," he said.
"We are about to launch a new product called Direct Input that will intercept
high-cost lending reviews and enable secondary market players to perform due diligence on the loan that they are
either going to evaluate or purchase for their investment portfolio," said Mr. Ogrodski.
According to the executive, Mavent products "are primarily based on quantifiable
data within a loan file" that can be tested for various federal, state and local rules and regulations at
the federal, state, county and city levels, and related predatory lending implications.
"Typically, these are a set of rules that are put into place when lenders
exceed the high-cost thresholds," he noted. "In addition to that, we have various other regulations or
laws that may involve maximum interest rates, fees, a grace period and so on. Loan fees that are either prohibited,
or expressly allowed, total fee rules so that, for example, brokers may not charge total fees of over 5%. Mavent
does those types of calculations."
However, what really drives the state-rule process is how the lender and broker
are licensed, he argued, because all lenders need to be licensed or exempt from licensing at the state level, which
determines what state rules from the national licensing repository need to be run.
As to lenders who operate in more than one state, the data screening process is
technically the same, even though it is more complicated because they need to license all of their branches in
each of the states they are doing business in.
"Mavent's Intercept product provides high calculations and predatory lending
related data, such as performance in compliance of the Truth in Lending Act and we also offer '2comply' - a full-product
suite," he said.
"In addition we provide a flood review option, a Social Security number review
and other products," Mr. Ogrodski said.
|
